Regional Sector Thematic Regional Telecommunications Neutral · 2019-07-15 · Samsung was the...

Regional Sector Thematic

See important disclosures at the end of this report 1

Market Deadline / PP19489/05/2019 (035080)

15 July 2019 Communications | Telecommunications

Regional Telecommunications Neutral (Maintained)

At The Threshold Of a 5G Era Stocks Covered 13

Ratings (Buy/Neutral/Sell): 5 / 6 / 2

Last 12m Earnings

Revision Trend:

Negative Maintain OVERWEIGHT on Indonesia, NEUTRAL on Malaysia,

Singapore and Thailand. Indonesia remains our sole sector O/W among the

ASEAN-4 markets, given the combination of attractive valuations and superior growth prospects, with on-going data price repair in the market. The little appetite for 5G in Indonesia looks to be a blessing in disguise as the telcos could hold out for the economics of 5G to improve and maximise the returns from huge 4G investments. Our preferred regional picks are XL Axiata, AIS, Singtel, and Time dotCom. Top SELLS are Maxis and DTAC. Key risks include stronger-than-expected competition, larger-than-expected capex and regulatory bugbears.

Making landfall. We expect 5G deployments to accelerate in 2020, when the

full technical specifications (Release-16) by the 3rd Generation Partnership Project (3GPP) are completed in March. More than 200 trials (including launches) have taken place globally, with 17 operators having commissioned 5G services based on a May 2019 report from the Global Mobile Suppliers Association (GSA). 5G subs are projected to hit 1.9bn, or 25% of all mobile subscriptions by 2024.

Singapore is slated to be first of the ASEAN-4 market to unveil 5G. Given

efforts to be a global frontrunner for innovation, we expect Singapore to lead the ASEAN-4 markets with a maiden mobile 5G deployment in 2020. The regulator has proposed to issue two nationwide 5G licenses, bundled with 3.5GHz and mmWave bands via a beauty contest, which is likely to take place by year-end or early next year. We see selective 5G launches for Malaysia and Thailand in late 2020/1H21, with the 700MHz to be assigned in Malaysia by mid-2020. Indonesia is likely to be the last of the ASEAN-4 markets to roll out 5G, as 4G networks are becoming mainstream, coupled with little clarity on the country’s spectrum roadmap.

FWA is a relevant initial-use case for Malaysia, Thailand and Indonesia

given the challenges and costs in rolling out fibre, especially in rural and less commercially viable areas. On top of capacity off-loading from mobile networks, fixed wireless access (FWA) is a feasible fit-for-purpose alternative to fixed/fibre networks, allowing mobile operators to take market share in the fixed broadband space. In our view, the early-use cases in Singapore would almost likely be enterprise-centric as the telcos are already collaborating with multiple partners on value-added solutions for key industry verticals and are involved in Smart Nation projects.

Sub-6GHz spectrum well sought after, as with the 700MHz. We believe

the 3.5GHz (C-band) would be a popular 5G band in Asia, given the fairly extensive device support and good propagation (capex efficient). The initial rollout of non-standalone (NSA) 5G networks will use 4G as an overlay, with capex likely to be manageable. The 3.5GHz spectrum is currently used for satellite downlink in most markets, which could delay the allocation for 5G use.

Top Picks Target Price

Advanced Info Service (ADVANC TB)

THB210

Singtel (ST SP) SGD3.35

Time dotCom (TDC MK) MYR10.30

XL Axiata (EXCL IJ) IDR3,400

Analysts

Jeffrey Tan

+603 9280 8863 [email protected]

Indonesia Research +6221 2783 0888

Kasamapon Hamnilrat

+66 2862 9739 [email protected]

5G: Coming to a market near you in 2020

Source : Ericsson

Company Name Rating TP % Upside

(Downside) P/E (x)

Dec-19F P/BV (x) Dec-19F

Yield (%) Dec-19F

Advanced Info Services

Buy THB210 -1.4 20.1 9.3 3.5

OCK Group Buy MYR0.75 33.9 21.6 1.1 0.0

Telkom Indonesia Buy IDR4,700 12.4 19.2 3.8 2.6

Time dotCom Buy MYR10.30 13.9 15.9 2.0 2.5

XL Axiata Buy IDR3,400 18.9 41.7 1.6 0.7

Axiata Group Neutral MYR4.30 -17.0 45.2 2.7 1.9

DiGi.Com Neutral MYR5.25 4.0 24.9 69.2 3.9

Indosat Neutral IDR2,800 3.7 -6.0 1.8 0.0

Singtel* Neutral SGD3.35 -5.4 18.9 1.9 4.9

StarHub Neutral SGD1.72 11.7 14.2 6.9 5.8

Telekom Malaysia Neutral MYR3.40 -21.5 21.3 2.2 1.6

Total Access Communication

Sell THB46.50 -12.3 17.1 4.6 2.9

Maxis Sell MYR4.65 -17.4 28.2 5.5 2.7

Advanced Info Services

Buy 210.00 -3.2 20.5 9.5 3.4 Source: Company data, RHB; Note: *FY20

mailto:[email protected]

mailto:[email protected]

Telecommunications Regional Sector Thematic

15 July 2019 Communication | Telecommunications



5G: Making Landfall 5G is set to radically transform the global mobile industry, when more mass-market rollouts take place in 2020 and beyond. Widely heralded as the central nervous system of the 21st century or “4G on steroids”, the next-generation technology promises blazing speeds of up to 1Gbps (10x more than 4G networks today), with a latency of <10 milliseconds (ms).

The seamless and ubiquitous connectivity offered by 5G will unleash a multitude of innovative connected services, ranging from ultra-high definition (UHD) 8K video streaming, immersive virtual and augmented reality (VR and AR), autonomous cars, drones for surveillance to intelligent automation.

5G would catalyse more widespread adoption of Internet of Things (IoT) and Industry 4.0 – the key driver of the digitalisation trend across the ASEAN-4 markets. In its early phase, 5G will co-exist alongside 4G networks, with wide-scale standalone (SA) 5G networks (5G new radio) expected to only go live after the full phase of technical specifications (Release 16) are released by 3GPP in 2020.

We see pockets of 5G rollouts across the ASEAN-4 markets starting from 2020, with regulators in the respective markets looking to assign 5G spectrum/licences in late 2019 and 2020. As the 5G device eco-system is still scaling up and network deployments take time, major commercial rollouts are not expected until 2021.

Of the ASEAN-4 markets, Singapore remains the front-runner and likely the first to roll out commercial mobile 5G services in 2020, followed by Malaysia and Thailand. Indonesia is likely to be the last to deploy 5G services (after 2021) as 4G networks are still becoming mainstream.

The International Telecommunications Union (ITU) broadly categorises 5G usage scenarios as follows:

i. Enhanced mobile broadband (eMBB) – eMBB would be the earliest iteration of 5G,

allowing operators to supplement existing mobile broadband connectivity and capacity;

ii. Ultra-reliable low latency communications (uRLLC) – aims to tackle latency-

sensitive services. Strict requirements on latency and reliability allows for critical communications, providing near real-time (<1ms in latency) for control and automation, which would enable applications such as assisted and automated driving, and remote surgery;

iii. Massive machine type communications (mMTC) – focuses on connection density,

effectively supporting interactions between smart objects on a large scale. mMTC would enable the creation of broader-use cases in smart cities, smart agriculture, further developing the digital society.

Figure 1: Usage scenarios for 5G

Source: IMT





Figure 2: 5G mobile subscriptions are projected to hit 1.9bn by 2024 – about a quarter of all mobile subscriptions of 8.8bn

Source: GSA

More than 200 trials and 17 launches globally

According to a May 2019 report by the GSA, 235 operators in 93 countries have launched, demonstrated, are testing, trialing or have been licensed to conduct field trials for 5G worldwide. This was up from 201 operators across 83 countries in Feb 2019.

17 operators have announced limited 3GPP-compatible 5G services – AT&T (US), EE (UK), Elisa (Finland and Estonia), Etisalat (UAE), Korea Telecom (Republic of Korea), LG Uplus (Republic of Korea), Ooredoo (Qatar), Optus (Australia), SK Telecom (Republic of Korea), Sprint (US), Sunrise (Switzerland), Swisscom (Switzerland), Telstra (Australia), Verizon (US), Vodacom (Lesotho) and Vodafone (Qatar). In Asia, maiden 5G commercial launches took place in South Korea, with all three incumbent operators rolling out services in April.

Figure 3: Countries investing in 5G

Source: GSA





…propelling rapid growth in the device eco-system

There were 90 announced 5G devices as at end-June (up from 33 in March) according to GSA. The number can be broadly broken down into 25 smartphones (including regional variants), seven hotspots, 23 customer premise equipment (CPE) and others (modules, routers, dongles, laptop and USB terminals).

Samsung was the first smartphone maker to unveil a 5G handset, ie the Samsung Galaxy Note 10 5G, in April. More recent 5G handset launches include Huawei’s Mate X and Mate 20, Xiaomi Mi Mix 3 5G, LG V50, Oppo’s Reno 5G and One Plus 7 Pro 5G with more running on non-standalone (NSA) 5G specifications expected to made available in 2H19.

Figure 4: 5G device timeline

Source: Ericsson Mobility Report (Jun 2019)

Figure 5: More 5G handsets will be launched in 2H19

Source: Samsung, Oppo & One Plus

5G adoption is expected to outpace 4G

South Korea, the first country to commercially roll out mobile 5G services in April, reported 1m 5G subscribers (subs) 69 days after the service was launched. This was ahead of 4G, which took 80 days to attain the same number of subs in 2011. The rapid pace of adoption in South Korea is supported by aggressive customer acquisition activities, specifically the subsidy on 5G handsets.





GSA expects operators to roll out 5G at a similar rate to 4G, with a coverage of 34% of the global population or 2.6bn people by 2025. It expects global 5G mobile connections to reach 1.1bn by 2025, with mobile operators’ revenue projected at a CAGR of 2.5% during 2020F-2015F, slightly higher than the 2% growth over 2015-2020F.

Ericsson is more positive on 5G prospects and expects the rate of adoption to accelerate with more mainstream services offered from 2020. As a result, it has raised its projection on global 5G subs to 1.9bn by 2024, making up 20% of all mobile connections then (projected at 8.8bn). LTE should still remain the dominant technology well into 2025, with subscriptions likely to peak in 2022 at around 5.3bn, according to Ericsson’s latest mobility report published in Jun 2019.

3GPP Release-16 will catalyse a stronger wave of network deployments

The technical specifications developed by 3GPP1 for the first phase of 5G (Release 15) was completed in Jun 2018. The initial phase is intended to lay the foundations for 5G new radio (NR) and core networks. Release 15 is also mainly directed at eMBB via a non-standalone (NSA) network, utilising 4G as an overlay.

The second phase (Release 16) – due to be completed by Mar 2020 – seeks to address the more advanced 5G capabilities, URLLC and mMTC, with the creation of a new 5G core/standalone (SA) network (5G- NR). SA networks will be able to fully extract the full capabilities and benefits of 5G including network virtualisation (NFV) and network slicing. As most device makers, network vendors and telcos are awaiting the release of the full specifications, we see 5G deployments only gaining pace from 2020/2021.

Figure 6: Distribution of 5G use cases across verticals

Source: Deloitte Consulting

1 3GPP is a standards organisation which develops protocols for mobile telephony





The economics for 5G are still pretty crummy

Across the globe, most markets and telcos are still struggling with the economics of 5G. In a survey conducted by McKinsey involving 46 chief technology officers (CTO) of large telcos worldwide (20% from Asia), about 60% of respondents find the ability to justify a business case as a key challenge.

Here, European operators constituted the highest percentage of responses, with US operators at the opposite end of the spectrum (less issues with business cases).

We believe the outcome of the survey resonates across the ASEAN-4 markets, with mobile operators still saddled with monetisation issues and ROs on their 4G networks against the backdrop of surging data traffic. Despite the poor economics, around half of respondents in the same survey see the latest wireless advance as an opportunity to cement, gain or regain network leadership (competitive positioning).

The second ranked priority for 5G is customer experience, followed by capacity (see Figure below). While FWA is an early and key use case in many markets, less than a fifth of respondents rate this as their first or second priority, on par with IoT.

Figure 7: Top 3 reasons for 5G rollout (%)

Source: McKinsey & Co. 5G Survey 2018

Figure 8: Biggest challenge for 5G strategy is the business case itself (%)

Source: McKinsey & Co. 5G Survey 2018

Spectrum assignments are underway (they don’t come cheap!)

Globally, most regulators/governments have assigned or are starting the process of assigning suitable spectrum to facilitate the rollout of 5G networks. The most common or preferred spectrum bands are the sub-6Ghz or 3500MHz (C-band), 26-28GHz (mmWave bands) and the 700MHz – a beachfront spectrum known for its wide propagation.





The spectrum assignment process, however, takes time (re-farming and repurposing of existing spectrum, auctions etc) and is one of the key impediments to facilitate timely network deployments.

Some markets that have held competitive auctions saw exorbitant prices paid for 5G spectrum – which significantly weakens the investment and business case for 5G. Germany, which completed its 3-month long 5G spectrum auctions in June, saw four telcos coughing out a staggering EUR6.6bn (USD7.3bn) for 420MHz bandwidth in the 2GHz and 3.6GHz bands.

The amount is close to proceeds raised from Italy’s 2018 spectrum auction (for 700MHz, 3.7GHz and 26GHz), while telcos in the UK paid USD1.8bn in the first round of 5G spectrum auctions in 2018. Meanwhile, Thai telcos recently paid THB52.7bn (USD1.7bn) for three blocks each (20MHz) of the 700MHz spectrum.

Across Asia, certain spectrum bands are still held by existing holders under concessions. Examples are the 2600MHz (owned by MCOT) in Thailand and the C-band, which is mainly used for satellite broadcasting in Malaysia, Singapore and Indonesia – but with the largest support in terms of the 5G device eco-system.

In Malaysia, the Government/regulator is assessing/reviewing the spectrum roadmap with a taskforce set up to directly oversee networks and spectrum matters related to 5G. The taskforce is expected to make its findings known by year-end, with some holistic proposals and recommendations. Most recently, the regulator in Malaysia, the Malaysian Communications and Multimedia Commission (MCMC) issued a public inquiry on the timeline, implementation, technical matters and fees related to the allocation of 700MHz, 2300MHz and 2600MHz – the first inquiry involving spectrum in the country. The bands are only available for use in 3Q20.

The Info-communications and Media Development Authority (IMDA) of Singapore launched a public consultation on the regulatory framework and policies for 5G in April and is currently evaluating industry feedback on its proposals. The regulator has proposed to issue two nationwide 5G licenses in late 2019/2020 via a beauty contest (Call for Proposal), with licences awarded only to existing mobile network operators (MNO). Winning operators are expected to offer 5G services on a wholesale basis to other service providers that intend to also roll out the service. Singapore assigned the 700MHz back in 1Q17 via an auction to the three incumbent telcos, with the spectrum expected to come into effect next year.

Our recent meetings with the Indonesian Telecommunication Regulatory Authority and the telcos suggest it is still early days for 5G in Indonesia, as 4G investments started in 2015 and operators are still expanding their coverage and capacity. XL (EXCL IJ, BUY, TP: IDR3,400), which was the earliest to roll out 4G believes 4G capex is likely to peak in FY19 and ease thereafter, with over 80% of population coverage achieved as at 1Q19 (90% target by end-FY19). We estimate XL spent IDR17trn (USD1.2bn) in 4G capex between FY16-18F, with 4G base transceiver stations (BTS) at 33,106 in 1Q19 (+64% YoY). It expects little 5G capex, if at all, for FY20/21F, with possibly limited rollout by the industry in 2021 at the earliest, given:

i. Overall weak investment proposition still for 5G in the country;

ii. Still-maturing device eco-system;

iii. Uncertainties as to availability of mid-to-higher band spectrum.





Figure 9: Key 5G spectrum developments

Source: GSA

Figure 10: Global snapshot of the 5G spectrum

Source: Qualcomm





Malaysia – Off To a Rousing Start

(Analyst: Jeffrey Tan, +603 9280 8863, [email protected])

Malaysia was one of the first countries in Asia to demonstrate the capabilities of the next-generation technology at a showcase officiated by Prime Minister Dr Mahathir Mohamad in April. The flagship event saw telcos, network vendors, equipment makers and industry experts coming together to showcase potential 5G use cases in a closed environment. The event follows the setting up of a test bed for industry players to jointly undertake 5G trials for a period of 12 months.

Prior to the showcase, the MCMC had, in Oct 2018, established a national 5G taskforce to study and recommend a holistic strategy for 5G deployment in Malaysia. The taskforce aims to deliver a comprehensive report in 4Q19 that covers:

i. Proposed solutions to resolve regulatory impediments;

ii. Proposed plan for timely availability of spectrum resources;

iii. Support for infrastructure and devices;

iv. Measures for consumer protection.

Figure 11: 5G use cases showcased at the Putrajaya 5G event in April

Maxis Remote industrial automation, enterprise vertical

Celcom Autonomous car, holographic video conferencing, virtual reality (VR) experience and gaming

Digi Emergency services/ public safety using drones

TM Smart home, safety and security applications for the oil & gas industry and road transportation

U-Mobile Remote healthcare

Source: Telcos

Figure 12: Celcom’s autonomous vehicle Figure 13: Celcom’s 5G autonomous car

Source: RHB Source: 5G Showcase (Putrajaya – Apr 2019)





Figure 14: Remote surgery by U-Mobile Figure 15: Digi’s 5G Advanced Response Centre (ARC) –emergency services

Source: RHB Source: Digi

Figure 16: Celcom’s 5G hologram call Figure 17: Remote 5G-powered industrial model vehicle by Maxis

Source: RHB Source: RHB

NFCP is moving the country into the next wave of digitalisation

The National Fiberisation and Connectivity Plan (NFCP) is a technology-agnostic strategic blueprint established by the Government to move Malaysia into the next era of digitalisation, with 5G used as a core enabler. The 5-year plan (2018-2023) seeks to improve, amongst others, broadband quality/coverage, reduce broadband prices, enable internet for all, and the expansion of fibre networks.

Some of the baseline targets include:

i. 98% broadband coverage by 2023 with minimum speed of 30Mbps;

ii. State capitals and selected high impact areas to have up to 500Mbps service by 2021;

iii. Copper networks to be phased out by 2023;

iv. 70% of schools, government offices, hospitals, clinics, police and fire stations to have fibre networks by 2022.





The Government’s objective to expand broadband access and make services more affordable may lead to further policy changes in the medium-to-longer term. Such changes could include but are not limited to the liberalisation of infrastructure access, a review of the National Facilities Provider (NFP) licensing framework, and strategic industry collaborations. In our view, the key challenge for the NFCP lies in the successful execution of the many thrusts and initiatives.

Figure 18: Baseline targets under the NFCP

Entry-level fixed broadband package at 1% of GNI by 2020

Gigabits availability in selected industrial areas by 2020 and to all state capitals by 2023

100% availability for premises in state capitals and selected high impact areas with a minimum speed of 500Mbps by 2021

20% availability for premises in suburban and rural areas with up to 500Mbps by 2022

Fibre network passes 70% of all schools, hospitals, libraries, police stations and post offices by 2022

Average speed of 30Mbps in 98% of populated areas by 2023

Source: MCMC

Figure 19 : NFCP – key thrusts

Source: MCMC





Figure 20: NFCP roadmap

Source: MCMC

While the NFCP’s primary focus is on fibre, the Government is open to deploying other forms of technologies (fixed wireless access, LTE, satellite, etc) to meet policy objectives and targets. In support of the NFCP, the national utility company, Tenaga Nasional (TNB MK, NEUTRAL, TP: MYR10.70) embarked on broadband trials in Jan 2019 involving 4,500 homes in Jasin, Melaka. YTL Communications also commenced trials of a pre-5G wireless technology pioneered by Facebook (Terragraph) in February, which aims to remove the complexities and delays associated with fibre rollouts.

The technology that uses existing street furniture to provide gigabit speeds in urban areas was reported to have attained peak download speeds of over 170Mbps in Penang. Malaysia was the second country globally to trial the technology after Hungary.

700MHz, 2300MHz and 2600MHz to be assigned by 1H20

The Government has announced the analogue switch-off (ASO) for broadcasters will take place by end-3Q19 (from an earlier 1Q19 deadline). This should pave the way for the 700MHz spectrum to be vacated for use by mobile operators in 2020. Malaysia is committed to the deadline for ASO by 2020, as agreed upon with other Asian member countries.

The MCMC had earlier stated that there were no plans to profit from the award of 5G spectrum, as doing so would affect the telcos’ ability to invest, and raise the cost to serve. This suggests that a competitive auction may be avoided for the 700MHz assignment. We estimate a competitive auction would cost a winning telco a whopping MYR3.1bn for a 10MHz block, based on the same premium applied in Singapore for the 700MHz auction, which was completed in 1Q17. Prior to the May 2018 general election, the MCMC had intended to assign the 700MHz via a beauty contest, with the reserve price fixed at MYR215.5m for a 10MHz block.

On 9 Jul, the MCMC issued a public inquiry on the allocation of the 700MHz, 2300MHz and 2600MHz bands, the first involving spectrum matters in the country. The public inquiry calls for feedback from industry experts, public and interested parties on MCMC’s proposals pertaining to the timeline of spectrum allocation, implementation plan, technical matters and spectrum fees, with 30 Aug as the deadline for submissions of feedback.





The MCMC has proposed for the 700MHz/2300MHz to be assigned via a beauty contest and the 2600MHz to be re-assigned to existing holders by way of spectrum assignment (SA). The spectrum assignment/conversion process would start in 4Q19 and completed in 2Q20, with the new bands coming into effect in 3Q20.

We believe the Government/regulator is also mulling the assignment of the mid band (3.5GHz) and mmWave spectrum (26-28GHz) bands for 5G use, pending the finalisation of 5G standards by the World Radio Communications conference, as well as the ongoing review of policy and initiatives undertaken by the NFCP taskforce.

Figure 21: Spectrum ownership of Malaysian telcos

Source: MCMC

FWA, B2B and IoT use cases in the early phase

We expect the early-use cases in Malaysia, Indonesia and Thailand to come from FWA and selected enterprise/B2B verticals – specifically in the areas of manufacturing, agriculture, healthcare and transportation. In Malaysia and Indonesia, FWA would address the challenges of fibre rollouts in rural areas, which tends to be prohibitive. FWA is consistent with the objectives and targets under the NFCP, where alternative fit-for- purpose technologies can be used to supplement fibre access.

Telekom Malaysia (TM) (T MK, NEUTRAL, TP: MYR3.40) has also not ruled out FWA as a solution for its 0.5m pre-uniFi (narrowband) subs, which are not eligible for upgrades to fibre broadband (uniFi) due to technical limitations on existing copper infrastructure. FWA is less compelling in Singapore, in our view, as the island state is well-covered by fibre, with little by way of monetisation opportunities for the mobile operators.

Aside from FWA, we see limited consumer/retail use cases in the initial years until the 5G eco-system matures in the next couple of years. The weak business case, monetisation issues, and lack of demand will see overall 5G adoption pushed back to 2022/2023.

Who are the likely 5G winners?

We believe larger telcos such as Axiata/Celcom, TM and Maxis, which have good head-starts and exposure in the enterprise segment (ICT, managed services, cloud computing, cyber-security, data centres, etc), would be the initial beneficiaries of 5G given that most use cases are likely to gravitate towards the enterprise space in the initial years.

Axiata has invested heavily in digital assets with deep domain expertise on 4G platforms that can be used for IoT deployments. Meanwhile, Maxis has committed to spend an additional MYR1bn on top of its base capex pa to beef up its enterprise capabilities over the next five years. Both Celcom (wholly-owned by Axiata) and Maxis have ongoing 5G trials with Huawei.

While the three telcos mentioned have yet to guide on 5G outlook and capex, their extensive infrastructure assets (including fibre), comprehensive enterprise offerings/solutions and convergence pursuits should allow them to capitalise on longer-term opportunities from 5G.





Singapore – At The Forefront Of Innovation (Analyst : Singapore Research, +65 6533 0781, [email protected])

Singapore intends to be at the forefront of 5G adoption and development. With the goal to be the leading digital economy, IMDA has taken a highly proactive stance in facilitating the country’s digitalisation efforts, which forms part of the broader Smart Nation project. The latter is contained within the three key pillars – Digital Economy, Digital Government and Digital Society, and the next generation technology via various regulatory initiatives. IMDA was also one of the first to assign the 700MHz spectrum to telcos in early 2017.

5G trials started in 2016

Singtel, in collaboration with Ericsson, launched Singapore’ first 5G pilot network at one-north, the country’s science, business and IT hub in 4Q18, using the trial spectrum provided by IMDA to deliver 5G coverage with eMBB speed and low-latency communications. This was followed by a live facility called “5G Garage”, where it teamed up with Singapore Polytechnic (SP) and Ericsson on 3.5GHz trials in Jan 2019.

In Nov 2018, StarHub announced that it completed the first pilot of 5G New Radio (NR) on the 3.5GHz band with Nokia, with the demonstration of various industrial and consumer applications. The company had trialled 5G back in 2017 with Huawei using 60-90GHz frequencies and with Nokia on the cmwave bands (3GHz-30GHz) using Nokia’s AirScale platform. Lastly, M1 collaborated with Huawei on 5G trials to showcase the first end-to-end live broadcast of 5G virtual reality (VR) on the 28GHz band in Jun 2018.

IMDA may award 5G licences by end-2019/1Q20 via a beauty contest

Singapore is one of the first Asian markets to unveil plans to award 5G spectrum. The IMDA had on 7 May launched a public consultation to seek views on the regulatory framework and policies for 5G, with the deadline for comments fixed on 19 Jun.

As part of the consultation process, the regulator has proposed to assign two nationwide 5G licences comprising 150MHz of 3.5GHz spectrum (100MHz for unrestricted/restricted use and 50MHz for unrestricted use) and 800MHz of the mmWave band (bundled with the 3.5GHz spectrum). This spectrum will be allocated via a “Call For Proposal (CFP)” or beauty contest, a departure from the competitive spectrum auctions held in the past, and is open to existing mobile network operators (MNO).

Interested telcos are to submit their preferences for the 3.5GHz and mmWave spectrum lots, provide detailed plans for 5G deployment and offer price(s) they are willing to pay for the 3.5GHz (above IMDA’s reserve prices). Both spectrum bands would have a duration of 12-15 years to provide sufficient investment certainty, while catering for technological changes.

Figure 22: Proposed assignment of 3.5GHz spectrum

Source: IMDA





Some of the baseline requirements include:

i. Provision of 5G standalone networks with more than 50% coverage within 24 months form the commencement of the spectrum right, with mmWave bands put into use within 12 months from the start of the spectrum right;

ii. 5G wholesale services to be offered to other MNOs/mobile virtual network operators (MVNOs);

iii. Designing and building trusted and resilient 5G networks to meet IMDA’s requirements.

In response to the consultation paper, Singtel has called on the IMDA to offer 5G spectrum for free, as doing so would improve the economics of 5G. The company believes it has “all the right ingredients” to win the rights to offer 5G services.

Figure 23: Evaluation criteria for 5G spectrum

Source: IMDA

Bulk of use cases will be enterprise-centric

We expect the early use cases in Singapore to focus almost exclusively on enterprise verticals, at least in the initial years, as this is likely to offer the strongest revenue potential and monetisation opportunities. The key demand driver, in our view, would come from the various Smart Nation initiatives in support of the digital economy, with commercial values to be found in industries such as manufacturing, healthcare and transport, amongst others.

Some of the strategic national initiatives under the Smart Nation project include an extensive sensor platform and smart urban mobility (autonomous vehicles). The case for consumer-centric 5G use cases in Singapore is less attractive, in our view, given:

i. Already highly competitive prices and innovative mobile services in the market, supported by a growing number of MVNOs;

ii. Extensive fibre coverage island-wide;

iii. Structural issues affecting telcos;

iv. Concerns over ROIs.

Positively, the Big-3 telcos have in recent years been placing greater emphasis on enterprise space to mitigate structural weakness and heightened competition in the consumer/retail space.





Figure 24: nuTonomy autonomous vehicle being tested in Singapore

Figure 25: ST Engineering was awarded a SGD7.5m contract from the Government for trials of smart lamp posts in 2018

Source: Smart Nation Singapore Source: Smart Nation Singapore, Mediacorp

Figure 26: Singtel has a proven track record for smart city and digital enterprise transformation

Figure 27: Singtel’s Comcenter store offers new digital experience

Source: Singtel Source: Singtel

Capex set to accelerate when 5G standalone standards are ratified

Singapore telcos have yet to guide on potential 5G capex given the evolving eco-system (spectrum, handsets, etc). At its 4QFY19 results briefing, Singtel said it is still early days yet to guide on 5G capex with mobile/use cases lacking. We think telcos are likely to take a more measured approach to capex, adopting an evolutionary approach using 4G as an overlay to reflect the little commercialisation values in the short-to-medium term.

We believe the harmonisation of 5G standalone standards and specifications by 3GPP in early 2020 will pave the way for greater visibility on industry 5G capex. The latter would be a function of network requirements (the procurement of a new core network and type of spectrum bands used), which could vary over time. According to Fitch Ratings, standalone 5G investments are expected to be significant during 2020-2021, which would see industry capex rise manifold and in turn drive up industry net debt/EBITDA.

All three telcos stand to benefit

We see the three key operators in Singapore as joint beneficiaries of eventual 5G deployment in the market, given the head-start in piloting various use cases across industry verticals (including manufacturing, transport/logistics and healthcare) and their involvement in smart nation and national level digitalisation projects. That said, we see overall investments to be at a measured pace and selective due to the still-weak investment case and proposition for 5G.





Indonesia – Not In a Hurry For 5G (Analysts: Indonesia Research, +6221 2783 0888; Jeffrey Tan, +603 9280 8863, [email protected])

5G – still a long shot in Indonesia

We believe it is still very early days for 5G in Indonesia. This is because there is still significant room for 4G to become mainstream with continuing aggressive network investments by the Big-3 telcos. The growing consensus among the operators are for 5G services to be commissioned in 2021/2022 at the earliest, with Indonesia likely to be the last of the ASEAN-4 to roll out the next-generation technology.

We believe the key uncertainty lies in a dearth of relevant use cases, the unclear spectrum roadmap and timeline for which spectrum would be made available. Spectrum clarity is required to determine the industry’s capex needs and to justify the commercial viability of the technology – especially in less densely populated areas.

XL was the first mover in deploying 4G in 2015, followed by Telkomsel two years later. 4G population penetration is currently estimated at over 80%, with areas outside of Java having less than 50% coverage. XL had spent over IDR17trn (more than USD1.2bn) on 4G capex over the past three FYs, and now boasts one of the largest number of 4G BTS in Java.

We see the slower time-to-market for 5G as a blessing in disguise for Indonesia as the operators would benefit from the eventual decline in industry capex and emergence of more viable use cases.

Mobile operators are also waiting for the finalisation of the draft spectrum roadmap by the Indonesian Telecommunication Regulatory Authority by year-end, which is intended to address concerns over spectrum retention under an industry consolidation. According to media reports, the Government is looking to re-farm the 700MHz and 3500MHz bands for 5G, although the timeline for this to happen is still up in the air.

The 700MHz is still widely used by national TV broadcasters while the 3500MHz is held by satellite broadcasters. We note that the national TV channels are controlled by individuals/groups that have strong links to the Government, which could be potential stumbling blocks for the re-farming of spectrum for 5G use.

Our recent meeting with Ericsson Indonesia yielded good insights on 5G and economic benefits for the country in the longer-term. Given the 5x more data capacity offered on 5G, Ericsson estimates the cost per GB would be 10x lower versus 4G. To date, Ericsson has announced 18 global 5G deals with the US, UK, Europe and Australia. It is also developing a comprehensive 5G platform with radio, transportation access, and service orchestration, which would make its platform more dynamic and flexible, allowing operators to deploy 5G networks gradually.

Operators have trialled several use cases

Most of the Big-3 telcos have conducted 5G trials/tests since 2017. During the 2018 Asian Games, Telkomsel demonstrated several use cases and programmes for 5G, including live streaming, football 2020, future driving, cycling everywhere, and autonomous buses. XL and ISAT have also trialled 5G indoors.

According to industry proponents, the 700MHz and 3500MHz bands are the most suitable for 5G in Indonesia due to the country’s vast geography and the many islands that make up the archipelago. Mobile operators would require a combination of low and high band spectrums to reach out to rural areas and meeting the high data demand, especially in the more populated cities in Java.





Figure 28: Quarterly data traffic (TB) Figure 29: Quarterly data volume/subs (GB/subs)

Source: Companies data, RHB Source: Companies data, RHB

FWA looks to be an early investment case

The current low fixed broadband penetration in Indonesia (c.10%) could see FWA emerge as an early use case for 5G. The technology allows operators to scale up capacity 10-100x more than 4G, with a more stable connection.

There are only two dominant fixed broadband operators in Indonesia (Indihome by Telkom and Link Net by Lippo Group) with a total of 5.8m home-passes. FWA would allow operators to tap the remaining 90% of the market at a much lower cost of deployment. While a number of operators have launched FWA on 4G, penetration remains modest with limited connectivity and sub-par customer experience.

Aside from FWA, the other 5G use cases typically advocated by the other ASEAN-4 markets (ie autonomous vehicles, transport and infrastructure and IoT) looks to be less attractive, in our view. This is due to the demographic profile of the country where a high percentage of the population does not have access to upper secondary education (currently 62% of Indonesian adults do not have upper secondary education).

This suggests continued demand still for blue collar jobs with the digitalisation trend taking a back seat. 68% of working young adults also do not have upper secondary education. The quality of domestic labour also remains low, as reflected in the low minimum wage (eg USD90/month in central Java).

Figure 30: Quarterly blended cellular ARPU (IDR/sub) Figure 31: Quarterly data ARPU (IDR/sub) and industry data yield (IDR/MB)


743,218

899,600

1,044,098 1,139,224

1,290,155

1,409,872

333,263 368,232 449,105

490,476 562,615

622,876

417,749 427,513 530,229

611,048 631,910

710,400

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

4Q17 1Q18 2Q18 3Q18 4Q18 1Q19

TB

Telkomsel ISAT EXCL

1.3 1.5

1.9

2.2

2.6 2.8

1.1 1.2

1.7

2.3

3.1

3.7

2.6 2.6

3.3

3.8 3.9

4.3

1.0

2.0

3.0

4.0

5.0

4Q17 1Q18 2Q18 3Q18 4Q18 1Q19

GB/subs

Telkomsel ISAT EXCL

38,576

33,875 34,767

39,904

42,332

40,002

20,341

15,636 17,419

22,243

25,221 26,467

32,578

29,344 29,450 31,100

31,794 32,380

13,000

23,000

33,000

43,000

4Q17 1Q18 2Q18 3Q18 4Q18 1Q19

ARPU (IDR)

Telkomsel ISAT EXCL

17,454

15,695

16,676

21,096

24,122 23,880

12,791

9,858

11,268

15,246

18,458

20,741

23,625

21,370

21,896 23,488

25,379

26,661

12.0

9.2

7.8

8.0 7.8 7.2

6.0

8.0

10.0

12.0

14.0

16.0

9,000

12,000

15,000

18,000

21,000

24,000

27,000

4Q17 1Q18 2Q18 3Q18 4Q18 1Q19

IDR/MBARPU (IDR)

Telkomsel ISAT EXCL Industry average data yield (IDR/MB)





XL seen as a front-runner in the 5G race

XL was the first mover to invest in 4G and the first to switch off 2G. Management previously indicated that 4G capex should taper off in FY19. Given that the telco has proven to be the most agile, and with 4G investments largely behind it, we see XL being the front-runner for 5G eventually.

XL could also leverage on the experience of its controlling shareholder, Axiata Group (AXIATA MK, NEUTRAL, TP: MYR4.40) across markets on 5G tests and rollouts. Although Telkom/Telkomsel has the strongest balance sheet among the Big-3 telcos in Indonesia, we think its SOE status and vast 2G/3G networks outside of Java could delay investment decisions on 5G.

Figure 32: Blended data prices per operator Figure 33: Quarterly data yields (IDR/GB)


11,496 11,496 11,681 11,496 11,496 11,496 11,527

9,93910,256

10,17310,173 10,173

10,1739,842

9,297 9,341 9,341 9,3419,756 9,854 9,854

5,486 5,486 5,486 5,486 5,486 5,486 5,486

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

13,000

Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19

IDR/GB

Telkomsel ISAT EXCL FREN





Thailand – Driving The Industry 4.0 Blueprint

(Analysts: Kasamapon Hamnilrat, +66 2862 9739, [email protected]; Jeffrey

Tan, +603 9280 8863, [email protected])

As part of Thailand’s 20-year National Strategic Plan to rid itself from the middle-income trap, a new economic model – “Thailand 4.0” was formulated with the aim to create new growth engines via technological innovation and digitalisation.

Infrastructure development remains high on the agenda with the development of 5G networks being promulgated as an essential economic enabler. While the current Government has prioritised the deployment of the next-generation mobile technology (a case in point is the recent assignment of the 700MHz spectrum), Thai telcos are less enthusiastic on the investment case for 5G given the prohibitive cost of spectrum set by the National Broadcasting and Telecommunications Commission (NBTC), concerns over cash flow, and uncertainties as to the spectrum roadmap.

Figure 34: Thailand’s 20-year National Strategic Plan

Source: Department of International Economic Affairs

700MHz spectrum assigned with payment extension on 900MHz

In a move widely seen as a reprieve for the industry and telcos, the Government recently assigned three blocks (2x 10MHz each) of the 700MHz spectrum to AIS (ADVANC TB, BUY, TP: THB210), DTAC (DTAC TB, NEUTRAL, TP: THB46.50) and True (TRUE TB, NR) for a combined THB56.4bn (THB17.58bn per 20MHz block). In return for the 700MHz, the telcos were granted extensions to their 900MHz spectrum payment by another five years by virtue of the Government exercising the powers conferred under the Section 44 order.





The telcos will pay for the 700MHz spectrum in annual instalments over 10 years. The 700MHz band is currently utilised by broadcasters and will be re-farmed for use by the mobile operators by Jul 2020, with a validity of 15 years.

We view the latest concessions by the Government (payment relaxation for the 900MHz) as easing the cash flow burden of telcos, given the previous bullet repayment for the 900MHz was due in 2020. It would allow telcos some breathing room and provide headroom for the industry to bid for other 5G spectrum, which is still under consideration.

Figure 35: Thailand’s spectrum portfolio and payment schedule

Source: Company data, RHB

Regulatory framework on spectrum still fluid

Aside from the 700MHz, our recent meeting with the NBTC indicates that it is evaluating several options for the allocation of other spectrum including the 2600MHz (MCOT owns 144MHz), 3.5GHz and the 26-28GHz (mmWave) bands, which are partly owned by Thaicom.

The regulator is also looking at amending the framework for future assignments, which could potentially include a multi-band auction and sub-dividing future spectrum licences into clusters/areas as opposed to a nationwide licence. We expect the process for the re-farming of spectrum for 5G use to be largely protracted (no clear timeline) given regulatory and political risks.

Still early days for 5G capex

Our discussions with the three telcos suggest that real 5G capex is still 2-3 years away given the developing eco-system (handsets, devices and the lack of clarity on the 5G spectrum roadmap, especially on the use of mid and high bands. We gather that AIS and True have plans to free up some 2G/3G spectrum, which should contribute to some savings for 5G capex in the medium-to-longer term.





The NBTC had earlier approved the 2G switch-off for the telcos by end-Oct 2019. Given that telcos have paid exorbitantly for the spectrum in the auction exercise (900/1800MHz) held back in 2015/2016 and the 1800MHz in 2018, we expect Thai telcos to exercise greater restraint on 5G spending until the economics of the technology improves.

Selective use cases, mostly enterprise-centric

While FWA is one of the potential use cases for 5G in Thailand, given the still relatively low fixed/fibre broadband penetration in the country, we see little investment case for other mainstream consumer/retail 5G deployments in the next 2-3 years. We note the number of fibre broadband customers on AIS has reached 0.79m as at 1Q19 with management targeting 1m subs by end-2019.

We broadly categorise the demand for 5G services in Thailand, based on the demand factors below. In our view, there are significant opportunities within the IoT space with support coming from few catalytic investments in the country including the Eastern Economic Corridor (EEC).

Figure 36: Services required for 5G technology






We note that all three mobile operators have started small-scale 5G trials for branding and marketing purposes. Aside from FWA, we see the applications of IoT as one of the early consumer and enterprise use cases in Thailand. The relevant investments are likely to be in smart projects and/or initiatives ie “Smart Home” for the real estate sector, “Smart Warehousing” or “Smart Cities”. These are discussed in the following sections.

Smart Home

Smart applications are increasingly a standard feature for many real estate developers in Thailand. Most developers view the bundling of smart features as a valuable marketing tool to attract buyers and investors.

The focus here is on creating new lifestyle experiences for buyers – with convenience, security and savings thrown in. The solutions marketed include lighting and climate control, security (sensor alarms, cameras and locks) and entertainment. Examples of notable partnerships between telcos and developers include “Perfect Smart City” by Perfect (PF TB) and AIS and “Ananda Urbantech” – a collaboration between Ananda Development (ANAN TB) and True Corp (TRUE TB, NR).

We believe smart living concepts would eventually emerge as the gold standard for property and home ownership in the era of digitalisation and 5G. Key drivers for stronger adoption include the decline in cost of smart devices, and higher re-sale value or properties equipped with smart features.

Figure 37: Smart home services and delivery robot

Source: Company data

Smart Warehouse

Several large companies in Thailand have been using the Automated Storage Retrieval System (AS/RS) in key distribution centres across the country. Companies like SCG Logistics – the subsidiary of Siam Cement (SCC TB, BUY, TP: THB530), COL (COL TB, NR), and JWD Info Logistics (JWD TB, NR) have already adopted this concept to run their internal logistic activities for the past few years.

The most prominent player we have seen so far is WHA Corp (WHA TB, BUY, TP: THB4.90), which partnered Alibaba to develop a build-to-suit land for the latter’s logistics business as part of its ASEAN supply chain.





Figure 38: COL’s automated B2B warehouse and Siam Cement’s central distribution centre


Smart City

The development of the EEC is one of the key strategies under Thailand’s 4.0 industrial blueprint to support Thailand’s digitalisation agenda. We expect the EEC to be positioned as a new hub for technology, a centre for trade & investments, and distribution/logistics.

Various smart projects have been initiated by the Government to-date including:

i. EECi (Eastern Economic Corridor of Innovation);

ii. EECd (Digital Park Thailand);

iii. Thailand Science Park.

We see the replication of smart city concepts and the application of IoT and big data within industrial estates as one of the means to attract foreign direct investments (FDI) into the country.

Among industrial estate developers in Thailand, Amata Corp (AMATA TB, BUY, TP THB26) has shown the most progress in smart city development. Its smart city project (Amata City) located at Chonburi is a key beneficiary of the EEC. In our view, integrated technology solutions, existing technology-centric clientele base, and long experience in the management of industrial estates would be Amata’s key competitive advantage, helping to shore up FDI flows.

Figure 39: Smart Park project in Amata City Chonburi






Figure 40: Regional Valuation Comparables

Company Bloomberg Currency Rating Share price

TP Mkt Cap P/E (x) EV/EBITDA (x) P/BV (x) DY (%) ROE (%)

Ticker (local CCY) (local CCY) (USDm) FY1 FY2 FY1 FY2 FY1 FY2 FY1 FY2 FY1 FY2

MY Telcos

Axiata Group AXIATA MK MYR Neutral 5.18 4.30 11,494.0 45.2 36.4 8.2 7.7 2.7 2.6 1.9 2.3 5.9 7.3

Digi.com DIGI MK MYR Neutral 5.05 5.25 9,543.9 24.9 23.8 14.5 14.1 69.2 65.4 3.9 4.1 278.1 275.1

Maxis MAXIS MK MYR Sell 5.63 4.65 10,702.3 28.2 28.5 14.1 13.6 5.5 5.2 2.7 2.7 20.7 19.0

TM T MK MYR Neutral 4.33 3.40 3,955.2 21.3 20.2 7.0 6.8 2.2 2.2 1.6 1.6 10.3 11.0

Time dotCom TDC MK MYR Buy 9.04 10.30 1,282.6 15.9 15.0 10.0 9.3 2.0 1.8 2.5 2.7 11.2 12.5

OCK Group OCK MK MYR Buy 0.56 0.75 488.0 21.6 19.9 9.4 8.5 1.1 1.3 0.0 0.0 5.6 6.0

Simple avg.- MY telcos (excl. OCK) 27.1 24.8 10.8 10.3 3.1 3.0 2.5 2.7 12.0 12.5

Weighted avg.- MY telcos (excl. OCK) 31.5 28.4 11.5 11.0 3.7 3.5 2.6 2.8 12.6 12.6

Singapore

Singtel ST SP SGD Neutral 3.54 3.35 42,522.6 18.9 17.6 8.6 8.2 1.9 1.9 4.9 4.9 10.0 10.6

StarHub STH SP SGD Neutral 1.54 1.72 1,961.5 14.2 14.8 6.1 6.1 6.9 6.5 5.8 5.8 48.9 44.0

Simple avg.- SG telcos 16.5 16.2 7.3 7.2 4.4 4.2 5.4 5.4 10.0 10.6

Weighted avg.- SG telcos 18.7 17.5 8.5 8.1 2.1 2.1 5.0 5.0 10.0 10.6

Indonesia

Telekomunikasi Indonesia TLKM IJ IDR Buy 4,180.0 4,700 29,553.9 19.2 17.0 6.8 6.2 3.8 3.4 2.6 3.1 19.7 20.2

XL Axiata EXCL IJ IDR Buy 2,860.0 3,400 2,181.7 41.7 14.9 5.7 4.9 1.6 1.5 0.7 2.0 3.9 10.1

Indosat ISAT IJ IDR Neutral 2,700.0 2,800 1,047.2 n.m. n.m. 5.8 4.5 1.8 2.2 0.0 0.0 n.m. n.m.

Simple avg.- Indo telcos 30.4 15.9 6.1 5.2 2.4 2.4 1.1 1.7 11.8 15.1

Weighted avg.- Indo telcos 20.8 16.8 6.7 6.0 3.6 3.3 2.4 3.0 18.0 18.9

Thailand

Advanced Info Services ADVANC TB THB Buy 214.0 210.0 20,619.0 20.1 19.3 9.5 9.1 9.3 8.1 3.5 3.6 0.5 0.4

DTAC DTAC TB THB Sell 53.3 46.5 4,086.0 17.1 17.1 5.9 5.6 4.6 4.0 2.9 2.9 0.3 0.2

Simple avg.- TH telcos 32.7 29.6 8.4 7.8 5.1 4.5 2.3 2.3 0.9 1.1

Weighted avg.- TH telcos 28.4 26.0 9.1 8.6 7.0 6.1 2.8 2.9 0.7 0.9

Weighted avg- ASEAN 4 telcos 147,608.4 24.3 21.8 9.0 8.5 3.9 3.6 3.3 3.5 12.1 12.6

Simple avg. - ASEAN 4 telcos 27.3 23.1 8.6 8.1 3.6 3.4 2.6 2.8 9.3 10.4

Share prices as at 12-Jul-19

Source: RHB





Figure 41: 1-year forward EV/EBITDA - MY telcos Figure 42: 1-year forward EV/EBITDA- SG telcos


Figure 43: 1-year forward EV/EBITDA- IND telcos Figure 44: 1-year forward EV/EBITDA - TH telcos


6

7

8

9

10

11

12

13

EV/EBITDA Mean EV/EBITDA

+1 sd +2 sd

-1 sd -2 sd

4.0

4.5

5.0

5.5

6.0

6.5

7.0

EV/EBITDA Mean EV/EBITDA+1 sd +2 sd-1 sd -2 sd

8

9

10

11

12

13

14

EV/EBITDA Mean EV/EBITDA

+1 sd +2 sd

-1 sd -2 sd

3

4

5

6

7

8

9

10

11

12

EV/EBITDA Mean EV/EBITDA+1 sd +2 sd-1 sd -2 sd

27

Market Dateline / PP 7767/09/2012 (030475)

RHB Guide to Investment Ratings

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member* of the subject company(ies) covered in this report *For the avoidance of doubt, the confirmation is only limited to the staff of research department

4. Save as disclosed below, RHBIB did not receive compensation for investment banking or corporate finance services from the subject company in the past 12 months.

5. RHBIB did not receive compensation or benefit (including gift and special cost arrangement e.g. company/issuer-sponsored and paid trip) in relation to the production of this report.

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parties concerned; 3. Affiliation between 2 companies whereby one or more member of the Board of

Directors or the Commissioners are the same;

4. Affiliation between the Company and the parties, both directly or indirectly, controlling or being controlled by the Company;

5. Affiliation between 2 companies which are controlled, directly or indirectly, by the same party; or

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3. RHB Securities, its staff or connected persons do not serve on the board or trustee positions of the issuer covered in this report.

4. RHB Securities Singapore Pte Ltd, its subsidiaries and/or its associated companies do not have and have not within the last 12 months had any corporate finance advisory relationship with the issuer covered in this report or any other relationship that may create a potential conflict of interest.

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https://research.rhbtradesmart.com/attachments/82/rhb-report-rhbib-and-rhbs-conflict-of-interest-disclosures-july-2019a-151904715508629015d25622113761.pdf

https://research.rhbtradesmart.com/attachments/82/rhb-report-rhbib-and-rhbs-conflict-of-interest-disclosures-july-2019a-151904715508629015d25622113761.pdf

https://research.rhbtradesmart.com/attachments/13/rhb-report-rhbib-and-rhbs-conflict-of-interest-disclosures-july-2019-200844420055833065d1ef80b926e1.pdf

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Hong Kong

The following disclosures relate to relationships between RHBHK and companies covered by Research Department of RHBSHK and referred to in this research report: RHBSHK hereby certifies that no part of RHBSHK analyst compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this research report. RHBHK had an investment banking services client relationships during the past 12 months with: -. RHBHK has received compensation for investment banking services, during the past 12 months from: -. RHBHK managed/co-managed public offerings, in the past 12 months for: -. On a principal basis. RHBHK has a position of over 1% market capitalization of: -. Additionally, please note the following: Ownership and material conflicts of interest: RHBSHK policy prohibits its analysts and associates reporting to analysts from owning securities of any company covered by the analyst. Analyst as officer or director: RHBSHK policy prohibits its analysts, and associates reporting to analysts from serving as an officer, director, advisory board member or employee of any company covered by the analyst. RHBHK salespeople, traders, and other non-research professionals may provide oral or written market commentary or trading strategies to RHB clients that reflect opinions that are contrary to the opinions expressed in this research report.

KUALA LUMPUR

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JAKARTA

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HONG KONG

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BANGKOK

RHB Securities (Thailand) PCL 10th Floor, Sathorn Square Office Tower 98, North Sathorn Road, Silom Bangrak, Bangkok 10500 Thailand Tel: +66 2088 9999 Fax :+66 2088 9799

SINGAPORE

RHB Securities Singapore Pte Ltd. 10 Collyer Quay #09-08 Ocean Financial Centre Singapore 049315 Tel : +65 6533 1818 Fax : +65 6532 6211

การจดัอันดบับรรษัทภิบาล 2561 (Thai Institute of Directors Association (IOD) – Corporate Governance Report Rating 2018

Website: www.thai-iod.com

IOD (IOD Disclaimer)

ผลสาํรวจการกํากบัดแูลกิจการบริษัทจดทะเบียนที่แสดงไว้นี ้ เป็นผลที่ได้จากการสํารวจและประเมินข้อมลูทีบ่ริษัทจดทะเบยีนในตลาดหลกัทรัพย์แหง่ประเทศไทย และ

ตลาดหลกัทรัพย์ เอ็ม เอ ไอ (“บริษัทจดทะเบียน”) เปิดเผยตอ่สาธารณะและเป็นข้อมลูที่ผู้ลงทนุทัว่ไปสามารถเข้าถึงได้ ผลสํารวจดงักลา่วจงึเป็นการนําเสอนข้อมลูในมมุมอง

ของบคุคลภายนอกตอ่มาตรฐานการกํากบัดแูลกิจการของบริษัทจดทะเบยีน โดยไมไ่ด้เป็นการประเมินผลการปฏิบตัิงานหรือการดาํเนินกิจการของบริษัทจดทะเบียนอีกทัง้มิได้

ใช้ข้อมลูภายในของบริษัทจดทะเบยีนในการประเมิน ดงันัน้ผลสํารวจทีแ่สดงนีจ้งึไมไ่ด้เป็นการรับรองถึงผลการปฏิบตัิงานหรือการดาํเนินการของบริษัทจดทะเบียนและไมถื่อ

เป็นการให้คําแนะนําในการลงทนุในหลกัทรัพย์ของบริษัทจดทะเบียนหรือคาํแนะนําใดๆ ผู้ใช้ข้อมลูจงึควรใช้วจิารณญาณของตนเองในการวิเคราะห์และตดัสินใจในการใช้

ข้อมลูใดๆที่เก่ียวกบับริษัทจดทะเบียนที่แสดงในผลสาํรวจนี ้

ทัง้นีบ้ริษัทหลักทรัพย์ อาร์เอชบี (ประเทศไทย) จาํกัด (มหาชน) มิได้ยืนยันหรือรับรองถงึความครบถ้วนและถูกต้องของผลสาํรวจดังกล่าวแต่อย่างใด

ADVANC AKP AMATA AMATAV ANAN AOT AP BAFS BANPU BAYBCP BCPG BRR BTS BWG CFRESH CHO CK CKP CMCNT COL CPF CPI CPN CSL CSS DELTA DEMCO DRTDTAC DTC EA EASTW EGCO GC GEL GFPT GGC GOLDGPSC GRAMMY GUNKUL HANA HMPRO ICC ICHI INTUCH IRPC IVLJSP KBANK KCE KKP KSL KTB KTC LHFG LIT LPNMAKRO MBK MCOT MINT MONO MTC NCL NKI NVD NYTOISHI OTO PCSGH PDJ PG PHOL PLANB PLANET PPS PRGPSH PSL PTG PTT PTTEP PTTGC PYLON Q-CON QH QTCRATCH ROBINS S & J SABINA SAMART SAMTEL SAT SC SCB SCCSCCC SDC SE-ED SIS SITHAI SNC SPALI SPRC SSSC STECSVI SYNTEC TASCO TCAP THAI THANA THANI THCOM THIP THRELTIP TISCO TKT TMB TNDT TOP TRC TRU TRUE TSCTSTH TTCL TU TVD UAC UV VGI VIH WACOAL WAVEWHA WINNER

2S AAV ACAP AGE AH AHC AIRA AIT AKR ALLAALT AMA AMANAH APCO AQUA ARIP ARROW ASIA ASIMAR ASK

ASN ASP ATP30 AU AUCT AYUD BA BBL BDMS BECBEM BFIT BGRIM BIZ BJC BJCHI BLA BOL BPP BROOKBTW CBG CEN CENTEL CGH CHEWA CHG CHOW CI CIMBTCNS COM7 COMAN CPALL CSC CSP DCC DCORP DDD EASONECF ECL EE EPG ERW ETE FN FNS FORTH FPIFSMART FVC GBX GCAP GLOBAL GLOW GULF HARN HPT HTCHYDRO ICN ILINK INET IRC ITD JAS JCKH JKN JWDK KBS KCAR KGI KKC KOOL KTIS L&E LANNA LDCLH LHK LOXLEY LRH LST M MACO MAJOR MALEE MBKETMC MEGA METCO MFC MFEC MK MOONG MSC MTI NCHNEP NINE NOBLE NOK NSI NTV NWR OCC OGC ORIPAP PATO PB PDI PJW PLAT PM PORT PPP PREBPRECHA PRINC PRM PT QLT RICHY RML RS RWI SS11 SALEE SANKO SAWAD SCGS SCI SCN SE SEAFCO SEAOILSELIC SENA SFP SIAM SINGER SIRI SKE SMK SMPC SMTSNP SORKON SPC SPI SPPT SPVI SR SSF SST STASUC SUSCO SUTHA SWC SYMC SYNEX TACC TAE TAKUNI TBSPTCC TEAM TFG TFMAMA THRE TICON TIPCO TK TKN TKSTM TMC TMI TMILL TMT TNITY TNL TNP TNR TOATOG TPA TPAC TPBI TPCORP TRITN TRT TSE TSR TSTETTA TTW TVI TVO TWP TWPC U UMI UOBKH UPUPF UPOIC UT UWC VNT WHAUP WICE WIIK XO YUASAZMICO

7UP ABICO ABM AEC AEONTS AF AJ ALUCON AMARIN AMCAS ASAP ASEFA ASIAN BCH BEAUTY BGT BH BIG BLANDBM BR BROCK BSBM BTNC CCET CCP CGD CHARAN CHAYOCITY CMO CMR COLOR CPL CPT CRD CSR CTW CWTD DCON DIGI DIMET EKH EMC EPCO ESSO ESTAR EEFLOYD FOCUS FSS FTE GENCO GIFT GJS GLAND GPI GREENGTB GYT HTECH IFS IHL III INOX INSURE IRCP ITITEL J JCK JMART JMT JTS JUBILE KASET KCM KIATKWC KWG KYE LALIN LEE LPH MATCH MATI MBAX M-CHAIMDX META MILL MJD MM MODERN MPG NC NDR NETBAYNNCL NPK OCEAN PAF PDG PF PICO PIMO PK PLPLE PMTA PPPM PRIN PSTC PTL RCI RCL RJH ROJNARPC RPH SAMCO SAPPE SCP SF SGF SGP SKN SKRSKY SLP SMIT SOLAR SPA SPCG SPG SQ SRICHA SSCSSP STANLY STPI SUN SUPER SVOA T TCCC TCMC THETHG THMUI TIC TITLE TIW TMD TOPP TPCH TPIPP TPOLYTTI TVT TYCN UEC UMS UNIQ VCOM VBIHA VPO WINWORK WP WPH ZIGA

http://www.thai-iod.com/

ขอ้มลู Anti-Corruption Progress Indicator 2560 ประกาศเจตนารมณ์ CAC

ได้รับการรับรอง CAC

N/A

Source: Thai Institute of Directors

ขอ้มลูบรษิทัทีเ่ขา้ร่วมโครงการแนวร่วมปฏบิตัขิองภาคเอกชนไทยในการต่อตา้นทุจรติ (Thai CAC) ของสมาคมส่งเสรมิสถาบนักรรมการบรษิทัไทย (ขอ้มลู ณ วนัที ่17 ต.ค.)

• ไดป้ระกาศเจตนารมณ์เขา้ร่วม CAC

• ไดร้บัการรบัรอง CAC

การเปิดเผยการประเมนิดชันีชีว้ดัความคบืหน้าการป้องกนัการมสี่วนเกีย่วขอ้งกบัการทุจรติคอรร์ปัชนั (Anti-Corruption Progress Indicators) ของบรษิทัจดทะเบยีนในตลาดหลกัทรพัย์แห่งประเทศไทยที่

จดัทาํโดยสถาบนัทีเ่กีย่วขอ้งซึง่มกีารเปิดเผยโดยสาํนกังานคณะกรรมการกาํกบัหลกัทรพัยแ์ละตลาดหลกัทรพัยน้ี์เป็นการดาํเนินการตามนโยบายและตามแผนพฒันาความยัง่ยนืสําหรบับรษิทัจดทะเบยีนโดย

ผลการประเมนิดงักล่าว สถาบนัทีเ่กีย่วขอ้งอาศยัขอ้มลูทีไ่ดร้บัจากบรษิทัจดทะเบยีนตามทีบ่รษิทัจดทะเบยีนไดร้ะบุในแบบแสดงขอ้มลูเพื่อการประเมนิ Anti-Corruption ซึง่อา้งองิขอ้มลูมาจากแบบแสดง

รายงานขอ้มลูประจาํปี แบบ (56-1) รายงานประจาํปีแบบ (56-2) หรอืในเอกสารหรอืรายงานอื่นทีเ่กีย่วขอ้งซึง่เป็นบุคคลภายนอก โดยมไิดเ้ป็นการประเมนิการปฏบิตัขิองบรษิทัจดทะเบยีนในตลาดหลกัทรพัย์

แห่งประเทศไทยและมไิดใ้ชข้อ้มูลภายในเพื่อการประเมนิ เนื่องจากผลการประเมนิดงักล่าวเป็นเพยีงผลการประเมนิ ณ วนัที่ ปรากฏในผลการประเมนิเท่านัน้ ดงันัน้ผลการประเมนิจงึอาจเปลีย่นแปลงได้

ภายหลงัวนัดงักล่าว หรอืรบัรองความถกูตอ้งครบถว้นของผลประเมนิดงักล่าวแต่อย่างใด

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